Apparently T-Mobile USA really was for sale, but it wasn’t Sprint that stepped up to the plate. Instead, Ma Bell’s grandchild is doing the buying, taking yet another step back toward its dominant position. AT&T (NYSE:T, news, filings) announced on Sunday its intention to buy the American mobile arm of the German incumbent for $39B. The combination of #4 and #2 will easily restore AT&T’s position as the largest mobile carrier in the USA. That is, it will if regulators can be persuaded to sign off on the deal.
Speculation lately had been about a combination of T-Mobile USA and Sprint, or possibly some sort of deal with LightSquared for an LTE buildout. However, the Sprint combination has always had all sorts of internal contradictions that if nothing else lowered the price the third place mobile carrier could pay for a deal to be viable. And the LightSquared possibility would have required major, new, long term investments in North America — something we all know DT has been balking at for a long time. A deal with AT&T has more synergies, but will be harder to float at the FCC.
AT&T gets more than size out of this though, they get a stronger foothold in ‘4G’ in the form of T-Mobile’s HSPA+ footprint. That will lessen the pressure to build out LTE too fast and give them an answer to Verizon and Sprint/Clearwire. They can then focus on ‘real 4G’ a bit further down the line. It will also relieve the endless iPhone focus by giving everyone a different story to talk about.
So everybody’s happy, right? AT&T gets bigger and DT gets out at what is probably the best price they could manage. But I think there is probably going to be substantial pushback from the regulatory side on this one. Even if opponents can’t stop the deal, look for them to use it as leverage on the network neutrality front.
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